Share This Page

Duhaime's Law Dictionary

Liquidation Definition:

The selling of assets and the use of the cash proceeds to pay off creditors or to distribute to other entitled persons such as beneficiaries to an estate.

The process of liquidation involves an investigation as to assets and liabilities, an accounting thereof, the sale of assets to render those into negotiable form (i.e. cash), followed by the sale of assets (eg. auction), and the distribution of the proceeds of sale to creditors or others such as, in the case of an estate, to the beneficiaries.

"Liquidation: the act or operation of winding-up the affairs of a firm or company by getting in the assets, settling with its debtors and creditors, and apportioning the amount of each partner's or shareholder's profit or loss, etc.

"To ascertain and set out clearly the liabilities of (a company or firm) and to arrange the apportioning of the assets; to wind-up".

"Liquidation, a word of French origin, is not a technical term, and, therefore, can have no fixed legal meaning; but it has a fairly defined legal meaning, and it is said to be a term of jurisprudence, of finance, and of commerce. It is defined as the act of settling, adjusting debts, or ascertaining their amounts or balance due; settlement or adjustment of an unsettled account ...

"Applied to a partnership or company ... the act or operation of winding up the affairs of a firm or company by getting in the assets, settling with its debtors and creditors, and appropriating the amount of profit or loss."

If you find an error or omission in Duhaime's Law Dictionary, or if you have suggestion for a legal term, we'd love to hear from you!

LAWimage

Sort By:

The template you are linking to has no template configured yet.

Duhaime Lawisms

A judge in Indiana threatened to fine a lawyer for contempt of court. "I have expressed no contempt for the court," said the lawyer; "on the contrary, I have carefully concealed my feelings."
Reported at W. Jurist 1, page 370 (1879)

Expand Navigation

Unless otherwise noted, this article was written by Lloyd Duhaime, Barrister, Solicitor, Attorney and Lawyer (and Notary Public!). It is not intended to be legal advice and you would be foolhardy to rely on it in respect to any specific situation you or an acquaintance may be facing. In addition, the law changes rapidly and sometimes with little notice so from time to time, an article may not be up to date. Therefore, this is merely legal information designed to educate the reader. If you have a real situation, this information will serve as a good springboard to get legal advice from a lawyer.